You are given the following risky cash flows and certainty equivalent factors for a four-year project:
Certainty Period Cash Flow Equivalent Factor
1 $2,500 .95
2 3,000 .92
3 4,000 .88
4 3,000 .84
The initial investment for this project is $8,000, and the risk-free interest rate is 6%. Calculate the net present value of the project.
$1,648
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Refer to Figure 13-13. What is the output price?
A) P4 B) P3 C) P2 D) P1
If the interest rate is 10 percent, the net present value of $500 to be received one year from now is
a. $413.22. b. $450. c. $454.55. d. $500.
Many college bookstores give faculty a discount that students do not receive. Show with a sketch graph why this practice is most likely a profit maximizing strategy instead of a college perk given to the faculty at college expense.
What will be an ideal response?
For a given level of inflation, if a resolution of international disputes leads to a cutback in government military spending, then the ________ shifts ________.
A. short-run aggregate supply line; downward B. short-run aggregate supply line; upward C. aggregate demand curve; left D. aggregate demand curve; right